Since wars, alcoholism, drug addiction, corruption, unemployment, etc. are all inefficient conditions that waste resources. The inefficient use of resources causes numerous ills not the least of which is global warming. Plainly there is a great need to solve any of these enormous problems. A solution could save millions of lives, make the world a safer place, and possibly change the course of history. The advent of the internet provides a platform and present invention provides an auction exchange system of incentives to solve these problems. The prior art reflects a number of electronic commerce systems inclusive of auctions, but none so ambitious as to promote efficient public policy and the world's social welfare.
1. Systems and Methods for Electronic Commerce
The prior art is replete with descriptions of electronic systems and methods that facilitate the transfer of traditional goods and services. In an online context, U.S. Pat. No. 5,285,383 entitled Method for Carrying Out Transactions Using Electronic Title, and U.S. Pat. No. 5,297,031 entitled Method and Apparatus for Order Management By Market Brokers, describe means of displaying merchandise for sale to a plurality of customers connected to a server computer and means of conducting sales and order transaction. These references are directed to goods and services that presently have an analogue outside of the online context, such as the sale of cars, of clothing, of memorabilia, or of financial products.
2. Systems and Methods for Electronic Auctions
A comprehensive description of the advantages of electronic auction systems and methods over traditional live auctions is presented in U.S. Pat. No. 5,835,896 to Fisher et al., and will only be summarized here. Electronic auctions do not require the bidders, the auctioneer, the seller, or the merchandise to travel to the same location. The auctioneer can be a computer system instead of a person. Any number of auctions can occur simultaneously, limited only by computing power and communications bandwidth. Merchandise becomes available to a greater number of buyers, increasing their collective influence on price while decreasing transaction costs for the seller. Again, these references only disclose the transfer of conventional goods and services.
3. Systems and Methods for Electronic Collaboration
References that expand upon prior art electronic commerce and electronic auction systems and methods are also found in the prior art. By way of example, U.S. Pat. No. 5,794,219 to Brown describes an online auction that permits individual bidders to pool bids during a bidding session. Bidding groups and their constituent members are registered in the server computer. Total bids for all members of the bidding group are compared to find the winning bidder. The present invention disclosed herein is a closer cousin to these references, yet still distinct from them.
In all of the prior art references noted and in the current state of the art, no systems and methods are described that evaluate and capture the economic benefit of innovations in policy, as conceived and expressed by innovators. Despite the intangible nature of such an enterprise, there is nothing to prevent the use of electronic systems and methods to do so.
By way of example in the greater portion of the economy, the relative uniqueness of an individual's contribution and the contribution of an individual's resources are the standard of fairness in market economies. The uniqueness of an individual's contribution and the contribution of an individual's resources is referred to here as the unique marginal revenue product. In a traditional patent system, because the unique marginal revenue product is not the standard of fairness and a 20 year exclusive grant is the standard of fairness, inefficiencies result. One reason for inefficiencies is because a competing innovator may only be minutes ahead of the competition, but receives patent protection for only 20 years. Inefficiencies also arise when an individual whose contribution is truly unique might only get 20 years of protection, when that individual may be 30 or 50 years ahead of their competition. As a result, they do not get adequate reimbursement. Inadequate reimbursement is inefficient because it fails to provide the profit signals defining the importance of unique and valuable contributions. There are no proprietary rights for those who develop good policy.
By way of a more specific example, let us suppose that an economist sees that the auctioning of airwaves could bring in $3 billion per year to the U.S. treasury. As an innovator, he takes the concept to an exchange comprising an interrelated set of policy auctions. The exchange has an auction for constituents and several levels of auctions for special interest groups. The constituents bid an average of 0.00033 of the savings or $100,000 apiece, and the special interest groups at the primary, general and floor auction level bid an average of $40,000 apiece or 0.000133 of the saving from the efficient policy. If we assume that there are 350 members of Congress, but only 175 are necessary to achieve a majority, then it would take $175 million for the constituents and $21 million for the special interest groups to save the government $3 billion. Since another economist could probably have figured out the benefits in one month, the economist would only get 1/12th of the savings or $250 million and the tax payers would get $2.5 billion, instead of none, of the $3 billion in savings.
Let us assume that a politician who is reluctant to support an efficient public policy is necessary to achieve a majority for that policy. The lowest bidding constituents, and special interest groups for the primary and general election auctions would be placing enormous pressures on their lowest bidders in inferior auctions to pressure the politician to support the efficient public policy. If the lowest bidder in the primary bid $40,000 and the next highest bidder bid $60,000, then the first lowest bidder would be penalized to $16,000 with the formula and the lowest bid would now be $76,000 for the district, threatening the innovator's profit on the low bidder's bid.